Married Women Property Act-360 Degree Protection By.Pradeep Patil

The beneficiary if major and competent to contract can transfer his beneficial interest by way of
assignment to any other person by virtue of sec 58 of the Indian trust act, but sub to the law for the
time being in force and extent in and to which he may dispose of such interest.
If such assignment is in favour of the permissible class of beneficiaries under sec 6 of the MWP
act i.e. wife and /or children of the life assured, the policy would still be within ambit of sec 6 of MWP
act.
If on the other hand, if the assignment is in favour of someone else outside the permissible class
of beneficiaries, the policy would lose the identity of being the policy under MWP act. Hence,
assignment is not allowed/ preferable.
On execution of an assignment by beneficiary, neither the trust nor its object comes to an end but
the policy still remains with the trust. The effect of assignment will be transfer of beneficial interest of
one beneficiary to another beneficiary. If the special trustees appointed will hold the policy in trust
for the benefit of the assignee beneficiary instead of for the benefit of the assignor beneficiary.
Form of assignment will be as per f. no 5250.
The special trustees can assign the policy but only by way of a mortgage with the right of
Redemption reserved. The special trustees cannot assign the policy absolutely. The trustees
Cannot nominate anyone to receive the policy money.
11) LOAN UNDER THE POLICY _
If life assured has given the powers to trustees to raise loan from LIC only for the benefit of
beneficiaries by filling the requisite addendum at the time of submitting the proposal, then only loan
can be raised.
The form of addendum may have restrictive clause like ‗provided the beneficiaries are major and
competent to contract and all are of one mind.‘ If this clause is there, then loan can be granted
provided the beneficiaries are major and with consent of all such beneficiaries.
Hence, proper care should be taken while selecting the proper addendum at proposal stage and
office should see the addendum while sanctioning the loan under the policy.
In case of policies where trustees were not originally given any power to raise loan, then at later
date life assured can give wider powers to raise loan under the policy from LIC only by executing a
deed poll.
Life assured can give wider powers to trustees to raise loan from LIC during the minority of the
beneficiaries or even if the beneficiaries are mentioned as a class.
Where loan is admissible and the trustees can raise loan, the loan application and the assignment
in favour of LIC should be signed by the trustees only. The consent of the beneficiaries where
required in terms of addendum should be obtained separately in the form of no objection letter. The
receipt of loan should be signed by the beneficiaries only.
Where trustees have not been appointed and where the beneficiaries have not been mentioned
as a class, but by name as personal designate by life assured and they are all major and competent
to contract, the application for loan and assignment form for loan should be signed by the life
assured and all the beneficiaries. The receipt of loan should be signed all beneficiaries only.
Where policy is foreclosed due to non-payment of loan interest, and balance surrender value is
payable, then discharge form must be signed by trustees and the beneficiaries.
It may happen that the special trustees who in fact obtained loan against the policy and as such
was a signatory to the documents for loan including assignment may have died or his appointment
may have been revoked and some other trustees may have appointed as a trustees in his place. In
such cases after the loan is repaid, reassignment of policy should be in the name of trustees
existing at the time of repayment of loan and not in beneficiaries or the assured or the earlier
trustees.
If loan was granted to the beneficiaries where no special trustees are appointed, the reassignment
on repayment of loan would be in favour of the beneficiaries.
12) SURRENDER OF THE POLICY _
Surrender of the policy would be the four party agreements between LIC, the life assured, the
trustees, and all the beneficiaries who must be major and competent to contract.
Application of surrender of policy, surrender discharge form must be signed by the assured,
beneficiaries, trustees jointly. The surrender value in such case must be paid over to trustees only.